Ford May Suffer as Chrysler Shutdowns Reach Suppliers (Update1)
By Alex Ortolani and Keith Naughton
May 6 (Bloomberg) --
Ford Motor Co., the only self- sufficient U.S. automaker, may be hobbled should prolonged shutdowns at Chrysler LLC and General Motors Corp. lead to failures of essential partsmakers.
Ford, launching three critical models, is at risk of periodic shutdowns if suppliers it shares with GM and Chrysler collapse, analysts said. GM is closing 14 North American plants for as much as nine weeks this summer and Chrysler, which filed for court protection from creditors on April 30, plans to close its factories until emerging from Chapter 11 in a month or two.
“There’s definitely potential for sporadic shutdowns at Ford,” said
Mike Wall, supplier analyst at industry consultant CSM Worldwide in Northville, Michigan. The idling of plants at Chrysler and GM “is going to shoot a significant amount of stress through the supply chain.”
Ford is vulnerable because of the interwoven nature of the auto-supply network. Ford shares 70 percent of its suppliers with GM and 64 percent with Chrysler, according to CSM. Asian- based automakers share 59 percent with Chrysler and 58 percent with GM. The loss of a single part can close a plant, Wall said.
Toyota Motor Corp. and
Honda Motor Co. may also be disrupted if suppliers who lose business during the GM and Chrysler shutdowns can no longer afford to stay in business, said
Craig Fitzgerald, a supplier consultant at Plante & Moran in Southfield, Michigan.
‘Severe’ Warning
Chrysler purchasing chief
Scott Garberding said in court documents that the failure of suppliers to the Auburn Hills, Michigan-based automaker would “cause severe production problems” for other carmakers, “including GM and Ford.”
Ford doesn’t anticipate production disruptions in the next 30 days, said
Todd Nissen, a spokesman for the Dearborn, Michigan-based automaker.
“We don’t see any short-term issues with continuing production,” said Nissen. “Beyond that, we’re all looking at the same things. It’s a fluid situation.”
GM, the largest U.S. automaker, has until June 1 to meet a government-imposed deadline to negotiate concessions with labor and lenders or file for bankruptcy. GM is operating on $15.4 billion in government loans and requested $11.6 billion more.
“Take a supplier with 50 percent GM and 50 percent Ford, if GM files, suddenly their book of business is cut in half,” said
Keith Francis, managing director at restructuring firm Hydra Professional in Farmington Hills, Michigan. “Ford, which has positioned itself to stay out of the bailout, has increased risk with its supply base because of what’s happening.”
‘Really Worried’
Ford, Toyota and other automakers are probably “really worried” about the fallout from the production shutdowns and managing their supply bases,
John Plant, the chief executive officer of
TRW Automotive Holdings Corp. said on a conference call today.
The Livonia, Michigan-based company, the world’s largest supplier of vehicle-safety equipment, managing distress among its own suppliers because of the drop in vehicle production, Plant said.
Ford rose 12 cents, or 2.1 percent, to $5.97 at 10:31 a.m. in New York Stock Exchanged composite trading. Ford has more than doubled this year. GM fell 20 cents, or 11 percent, to $1.65. GM declined percent this year through yesterday.
Large Risk
Some of the country’s largest suppliers may follow Chrysler into bankruptcy if rival GM also files.
Lear Corp., which gets a combined 26 percent of business from GM and Chrysler, and
American Axle & Manufacturing Holdings Inc., reliant on the automakers for 84 percent of sales, may be most at risk,
Himanshu Patel, a New York-based analyst with JPMorgan Chase & Co. wrote in a May 4 report.
“A potential GM bankruptcy may even cause these two suppliers to strategically file,” he wrote. Patel rates both Southfield, Michigan-based Lear and Detroit-based American Axle “neutral.”
American Axle is managing relationships with customers as usual, said spokeswoman
Renee Rogers. The company is monitoring the situation with Chrysler, she said, declining to comment on how it’s affecting shipment of parts.
Mel Stephens, a Lear spokesman, declined to comment.
The bigger risk to automakers may be smaller companies that provide critical parts and may go out of business with little warning, said Francis, the analyst.
Bigger Risk
President
Barack Obama has said he intends for Chrysler’s bankruptcy reorganization to be completed within 60 days. Bankruptcy Judge
Arthur Gonzalez gave the automaker permission on May 4 to pay suppliers for parts and services provided before Chrysler filed for court protection. The automaker owes $1.71 billion to direct suppliers of parts and $600 million to indirect providers, according to court filings.
Wall does not anticipate a mass shutdown at Ford. He predicted Ford would engage in “triage” to provide financial aid to keep essential suppliers alive.
“If you don’t go in and provide financial assistance, how much money do you lose if your plant goes down?” said Wall.
Fitzgerald agrees, and said most automakers could manage in the near-term with no need for forced shutdowns unless Chrysler’s bankruptcy drags on.
“It really is important that Chrysler come out as quickly as they possibly can,” he said.
Ford New Models
Ford has had no delays in introducing Ford’s newest models, the redesigned Fusion, Mustang and
Taurus, said Nissen, the spokesman. Ford launched the Fusion last month, is rolling out the Mustang now and has plans for a summer introduction for the Taurus.
Ford, which has temporarily idled factories to reduce inventory, also has no plans for a prolonged shutdown. The automaker furloughed factories this week in Illinois, Ohio and Missouri and plans to resume production later this month.
Toyota hasn’t changed its approach to dealing with the current U.S. supplier situation, said
Mike Goss, a spokesman for Toyota’s North American manufacturing unit in Erlanger, Kentucky: “We are confident in our ability to work with suppliers to insure an uninterrupted supply of parts and materials.”
Honda, whose Accord was the best selling car in the U.S. last month, is anticipating the Chrysler “situation will have some impact, but we’re still evaluating things at this point,” said
Ed Miller, a Detroit-based spokesman.
), la seconda è l'unica che ti dà il 100% di possibilità di recuperare qualcosa (ossia il prezzo che ti pagano, che incorpora il rischio, a carico del compratore, di restare con il cerino in mano ove si andasse al CH11).
), e poi un anno e mezzo fa mandò una lettera agli investitori scrivendo che se Chrysler e GMAC fossero andate in default, l'impatto sull'andamento dei fondi di Cerberus sarebbe stato minimo ?
